Corporate performance is often described as an effect of just two factors: where and how a company competes – or, more formally, its industry and its capabilities. Debate over the relative importance of these two factors has proved heated and long-standing. On one side, industry proponents contend that being in the right place is what matters, juxtaposing, say, the recent
profits earned by oil companies with the losses that have bludgeoned airlines. On the other, advocates for the importance of company factors claim that performance differences within industries are the more powerful element, pointing to success stories even in hard-hit industries – Southwest Airlines, for example, as compared with traditional network carriers.

Authors: Janamitra Devan, Eric Matson, Lenny Mendonca

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